Exam 11: Organizational Structure and Controls

The integrated cost leadership/differentiation strategy is difficult to implement mostly because

The most centralized and most costly form of the multidivisional structure is the

The cooperative form is an M-form structure in which horizontal integration is used to bring about interdivisional cooperation.

The three structural characteristics that differ among organizational structures include all of the following EXCEPT

To properly execute strategic controls in firms using related diversification,the executives must have a deep understanding of each unit's business-level strategy.

In Japan,the center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT

Firms switch from a functional structure to a multidivisional structure because greater levels of environmental complexity and uncertainty make it necessary for the firm to develop cooperative relationships with its stakeholders.

Case Scenario 2: Palmetto. Palmetto was an early pioneer of personal data assistants (PDAs)and dominates that market space (in terms of market share)with its core product, the Palmetto Pidgy. Because this product category was entirely new to the market, Palmetto had to internally develop the hardware and software sides of the business, and today it is both a manufacturer of PDAs and a programmer and licensor of its PDA operating system software. Recently, however, the hand-held device maker's performance has taken a dive as a result of slumping sales and costly inventory problems. Palmetto has also had difficulty coordinating its software and hardware businesses, in part because of the near absence of a coherent structure and the differing economics underlying the two. Specifically, hardware for PDAs is increasingly a cost-based business, while software is a highly differentiated one. While Palmetto is doing pretty well in both businesses, its own resource base does not allow it to compete any differently than that proscribed for other industry participants (that is, it competes on cost with hardware and features with software). In addition to the issues created by these fundamental differences, other large companies are entering both the equipment (such as Sony)and software (such as Microsoft)sides of its business, putting further pressure on margins. Management has decided that it is unable to focus on the complexities of each of these businesses so it is opting to break Palmetto into two separate, independent public companies - Pal, Inc. will be devoted to hardware and Mettolink, Inc. will be devoted to software. -(Refer to Case Scenario 2). How would the implementation of this structure differ for Mettolink?

Ichabod Industries has a Latin American Division,a European Division,an Industrial Lubricants Division,and a Food Service Division. Ichabod Industries probably uses the______organizational structure.

One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so

Case Scenario 2: Palmetto. Palmetto was an early pioneer of personal data assistants (PDAs)and dominates that market space (in terms of market share)with its core product, the Palmetto Pidgy. Because this product category was entirely new to the market, Palmetto had to internally develop the hardware and software sides of the business, and today it is both a manufacturer of PDAs and a programmer and licensor of its PDA operating system software. Recently, however, the hand-held device maker's performance has taken a dive as a result of slumping sales and costly inventory problems. Palmetto has also had difficulty coordinating its software and hardware businesses, in part because of the near absence of a coherent structure and the differing economics underlying the two. Specifically, hardware for PDAs is increasingly a cost-based business, while software is a highly differentiated one. While Palmetto is doing pretty well in both businesses, its own resource base does not allow it to compete any differently than that proscribed for other industry participants (that is, it competes on cost with hardware and features with software). In addition to the issues created by these fundamental differences, other large companies are entering both the equipment (such as Sony)and software (such as Microsoft)sides of its business, putting further pressure on margins. Management has decided that it is unable to focus on the complexities of each of these businesses so it is opting to break Palmetto into two separate, independent public companies - Pal, Inc. will be devoted to hardware and Mettolink, Inc. will be devoted to software. -(Refer to Case Scenario 2). Which structural form would be best for Pal given that it competes on the basis of low cost?

To implement a related linked strategy,a firm usually needs an SBU structure.

An overriding lesson from the Chapter 11 Opening Case about Borders is that failure to properly structure an organization can contribute to poor strategic decisions and eventually bankruptcy.

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?

Companies and business units of large diversified firms using the cost leadership strategy should use strategic controls.

Centralized and formalized procedures allow for greater flexibility,an important factor for firms using a cost leadership strategy.

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier companies to have better communication with Toyota. This is an example of a(n)

Cisco used the______structure to implement its______strategy.

When a corporation pursues a related constrained diversification strategy,financial controls may not add value to strategy implementation efforts because it is difficult to

The Chapter 11 Opening Case about Borders shows that although strategy has an important influence on structure,once a particular structure is in place,that structure influences strategy.